Wednesday, 12 June 2013

Choose the right mix

Amit Kapoor, who led the study to rank India's most competitive cities, says the country's emerging cities have the potential to grow into thriving business centres in the future. Excerpts from an interview with BW:

What are the most significant findings of the study?Indian cities have a long way to go before their standards match Singapore or Chicago. Our cities face infrastructural constraints and mediocre management. But a positive trend has been the emergence of new cities. They can deliver in the long run if the right policies are followed. The report assesses the pros and cons of these cities, and, hence, provides a direction for policymakers.

What helped the top rankers make it to the top? Surprisingly, Mumbai has topped the rankings despite its poor liveability, but the city is most conducive to business. Its long history of commerce helps it create space for newer or advanced businesses. Delhi and Bangalore lag on certain specific scales — Delhi lacks a well-connected transport, while Bangalore faces mediocre business conditions though they are good enough to be recognised among the top in the list of competitive cities. These cities face infrastructure deficiencies that increase the cost of living and business, but it is the aggregation of many factors that define a city's competitiveness.

Have the business conditions of Indian cities improved since last year?Yes. A key indicator is how cities are improving performance on factors such as ease of doing business. But a worrying trend is the crumbling infrastructure, and transport woes that affect productivity.

Are smaller cities becoming more competitive? Or are they falling?An encouraging trend is the emergence of newer cities around the traditionally acclaimed ones, and the development of new urban agglomerations. A more optimistic indicator is the stable performance of some of the upcoming cities on competitiveness sub-indices. Ahmedabad, Baroda and Visakhapatnam perform consistently on all indices, showing a more comprehensive growth strategy. Their government bodies have adopted the route to develop on grounds of competitiveness as a whole rather than just administratively or economically.

How do satellite towns and tier-II cities fare on business competitiveness?In the initial phase of development, cities developing around existing metros will benefit from the existing infrastructure of a big city, but a tier-II city needs to begin from scratch. Each set of cities has its own obstacles. Without a proper communications relay and transport facility, a satellite city cannot exist. Similarly, policies need to be focused when developing a tier-II city to match the metros in their business and liveability potential.

What are the key factors that will determine competitiveness of cities? There is no key factor that a city would benefit from. The competitiveness of a city is defined by the demand conditions, factor conditions, related and supporting industries and the extent of competition in the market. Cities need to choose the right mix of all these factors.